25 Million Would Benefit From Minimum Wage Raise
Seven years without a raise has resulted in millions of low-wage workers falling further behind, with scant hope of ever climbing to the middle class.
Oxfam America, known more for its work in alleviating poverty internationally, turned its attention to domestic poverty in the United States. For the purpose of educating Congress on the urgency of raising the minimum wage, the Oxfam study released June 11 called “Working Poor in America,” provides a report with interactive maps, which show where the highest concentrations of low-wage workers are located, as well as tables ranking each state and congressional district by the number of low-wage earners benefiting.
Congress passed the federal minimum wage of $7.25 in 2007, during the administration of George W. Bush, when there was bipartisan support.
“When the Senate voted to raise the minimum wage to $7.25 in 2007, only three senators voted ‘No,’ while 94 senators voted in favor of a raise; in the House, the minimum wage passed by a 315–116 margin, with 82 Republicans voting for it,” states the Oxfam press release.
Today, conservatives in Congress largely oppose the president’s recommendation to raise the minimum wage to $10.10.
However, the public would like to see it raised. An ABC News/Washington Post poll last December found that 61 percent of Americans support raising the minimum wage; 31 percent oppose.
Support for raising the minimum wage has been gaining ground in recent days.
Massachusetts could set a record minimum wage. On June 12, the Senate raised the minimum wage from $8 to $11 by 2017. The Boston Globe reports that the Massachusetts House of Representatives and the governor will likely approve it as well, and it will become law.
According to Reuters, Connecticut on the same day passed a minimum wage of $10.10, which matches the president’s most recent recommendation for the nation.
On June 2, the Seattle City Council unanimously approved a $15 minimum wage proposal from the mayor. It’s to be phased in over 3 to 7 years, depending on employer size, beginning on April 1, 2015. Washington state already has the highest minimum wage among the 50 states at $9.32.
In Albuquerque, N.M., voters passed an ordinance in 2012 that went into effect the next year to adjust the minimum wage annually for inflation. In January it became $8.60.
On July 1, California’s minimum hourly wage will become $9, and by Jan. 1, 2016, $10 per hour. Long Beach and San Jose, Calif., already have local minimum wage ordinances.
It is not only workers who make between $7.25 and $10.10 an hour who would benefit from a raised federal minimum wage. “Some workers earning just above the proposed new minimum of $10.10 are also likely to receive a wage increase as employers adjust wages to preserve internal pay ladders,” states the report. The study defined workers likely to be affected by a minimum wage increase to $10.10 per hour as those who currently earn $7.00–$11.50 per hour.
Who Benefits Most
The study found that states with the highest percentages of low-wage workers who would benefit by a minimum wage increase are concentrated in the South, with some notable exceptions. Arkansas, Mississippi, and Oklahoma are the top three states to benefit, followed by West Virginia, South Dakota, Idaho, Florida, Montana, South Carolina, and Kentucky. The percentages of low-wage workers in those states range from 22.2 percent to 25.2 percent.
The state with the least percentage of low-wage workers is Alaska at 13.2 percent, followed by Maryland, Massachusetts, Connecticut, and New Jersey.
Probably the most useful tool of the study is the breakdown into the 435 congressional districts. The districts with the greatest number of workers to benefit from an increase range from highly dense urban to poor rural areas. California’s 40th district in East Los Angeles topped the list at 31.8 percent, or 81,000 people, who would benefit. In contrast, the largely rural south coastal district in Texas’s 34th comes next at 29.9 percent, or 65,000 people, benefitting.
Low-Wage Service Jobs
The proportion of low-wage jobs is increasing. As the country has recovered from jobs lost during the Great Recession in 2008, new jobs have been concentrated in lower-wage industries and occupations: cashiers, food preparation and serving workers, and waiters and waitresses, which are categories that the Bureau of Labor Statistics (BLS) uses.
The 2013 mean hourly wage for cashiers ($9.82), food preparation and serving workers ($9.08), and waiters and waitresses ($10.04) is below the proposed amount. The number of people in these occupations is 8.8 million, according to the BLS. Other industries and occupations don’t pay much higher: retail salespersons ($12.20); laborers and freight, stock, and material movers ($12.83); and janitors and cleaners, except maids and housekeeping cleaners ($12.09). These groupings constitute 8.9 million.
“Today, there are nearly two million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries,” stated the National Employment Law Project (NELP), in April.
Thus, the jobs that were lost are not comparable to the jobs that have been created. “The economy now swells with low-wage service jobs and relatively fewer better-wage, high-skilled jobs,” states the Oxfam report.
Moreover, low-wage jobs generally provide fewer benefits, such as paid sick leave, vacation days, and pension plans, according to the report.
Minimum Wage and Poverty
The minimum wage was first established in 1938 by President Franklin Roosevelt. Since then, it has been raised 22 times. The high point came in 1968 during President Lyndon B. Johnson’s “War on Poverty.” Although it was less than the current $7.25 an hour, the real value of the minimum wage in 1968 was the highest in the history of the law—in today’s dollars, it was $10.69 an hour, according to the report.
The poverty line for a family of three is $18,769. In 1968, the minimum wage provided an annual income of $19,553, adjusting for inflation. Thus, when Congress raised the wage in 1968, it “actually lifted a family of three above the poverty line,” states the report. Today, a full-time minimum wage worker earns an annual income of $15,080, which is well below the poverty line for a family of three, and it is more than $4,000 less than the real value in 1968.
Basically, $7.25 is a poverty wage. Passage of a $10.10 minimum wage would mean, “roughly 5 million to 6 million Americans would be lifted out of poverty.”
Oxfam drew on three years of microdata from the 2010 to 2012 American Community Survey (ACS) that the U.S. Bureau of Census administers. Because the ACS doesn’t drill down far enough to the congressional district level, the study had to develop its own methodology to produce estimates. Economist David Cooper’s research formed the basis for the Oxfam report and interactive maps.
The estimate of 25.1 million people who would be affected by raising the minimum wage is comparable to the Congressional Budget Office estimate of 24.5 million. However, the utility of the Oxfam study lies in its breakdown of the number of workers likely to be affected in each of the 50 states and 435 congressional districts.